Lisa Hess, a Forbes contributor, recommended repositioning portfolios to take advantage of new world of rising oil prices, rising inflation, and uncertain monetary policy. Stocks and Bonds do poorly, according to Hess, because bond prices go down as inflation forces up interest rates and stocks go down as companies have a hard time keeping selling prices ahead of rising inputs.

What to do:

1. Short U.S. Treasurys

a. UltraShort Lehman 20+ Year Treasury (TBT)- bets against long maturities

b. UltraShort Lehman 7-10 Year Treasury (PST)- bets against shorter term maturities

2. Invest in companies that profit from rising demand of commodities

a. Titan International

- makes huge tires for agricultural machinery

b. Hemisphere GPS

- manufacturer of GPS and steering systems for tractors

- devices improve productivity

- trades at 38x but earnings could double each of next few years

- widespread adoption of GPS for large scale farming is inevitable

c. American Commercial Lines

- barge manufacturer

- operates barges moving grain,

...

Inflation in South Korea has had its biggest rise in 10 years as the country battles rapidly rising oil prices. That’s well above a forecast 4.8% annual rate from the country’s central bank, issued a few hours before the official government figure was released yesterday. The inflation figure is well above those in Europe (4% in the euro zone according to an early estimate released Monday night), the 4.2% rate in Australia and the US and the accelerating 4% plus rate in New Zealand. The South Korean official statistics office said the June consumer price index climbed 5.5% from June 2007, accelerating from May’s 4.9% figure. The figure was a touch above the estimates of economists surveyed by Bloomberg and Reuters. Prices in June jumped 0.6% from May. The central bank had earlier forecast that inflation this calendar year would quicken to a decade high as fuel and food costs surge. Like ...

Article Source Time to reassess the potential for recent oil price increases to contribute to an economic downturn. The sharp spikes in oil prices associated with the 1973-74 oil embargo, the 1978 Iranian Revolution, the Iran-Iraq War in 1980, and the first Persian Gulf War in 1990 were each followed by an economic recession. However, when oil prices started to rise again five years ago, many of us suggested that things would be different this time, in part because the price was rising much more gradually and so should be less disruptive of consumer spending patterns. Others emphasized that, despite the price increases, oil was still cheaper than it had been historically if you took into account inflation. However, once you include the most recent data, neither of those claims would still be true. Average monthly dollar price of West Texas Intermediate (from FRED divided by ratio ...

I have talked to dozens of regular, everyday working Chinese during this trip and not one person has vigorously complained about the price of oil.Why not? Other than the very rich, most Chinese use public transportation or bicycles to get around. Plus, the price of gasoline is controlled by the Chinese government and highly subsidized. The Chinese care a lot more about the price of a bushel of wheat than a barrel of oil.Rising oil prices may put send the U.S. into a recession, but the impact of high oil prices in Asia is much more muted.

I wouldn't touch an airline with a 10 foot pole with oil over $100 a barrel.But business for Asian airlines is booming. The International Air Transport Association says here is a global shortage of pilots per year and warned that an additional 17,650 new aircraft will hit the skies by 2018 that will require 207,000 pilots.I don't like airlines because the capital investment of airplanes is too high and the rising oil prices are killing profits. There is probably a very good airline service company that is the right way to profit from this Asian travel boom. I just have to find it.

In the May 12th edition of Fortune Magazine, there is an interesting article titled Copter Crisis that delves into how the growth in offshore drilling for oil and gas has led to increased utilization of helicopters to get to and fro from the offshore platforms. This offshore drilling boom combined along with increased usage of choppers for private travel has lead to a shortage of helicopters and their parts. I figured I would attempt to provide more color on chopper related investments through this blog entry. Based on the earnings forecast of offshore drillers like Transocean (RIG), Diamond Offshore Drilling (DO) and Noble (NE), the offshore oil drilling boom is likely to continue for years to come. In fact Transocean earned over $1 billion in just the first quarter of this year. We picked up Diamond Offshore Drilling (DO) for the SINLetter model portfolio in January 2007 and ...